As more older Americans navigate financial uncertainty, a significant chunk of the workforce is opting to gradually transition into retirement, according to a recent survey by WTW.
The 2024 Global Benefits Attitudes Survey revealed that one in three workers aged 50 and older are either in the process of phasing into retirement or planning to do so. This trend, which involves reducing work hours or job responsibilities, reflects the increasing appeal of a gradual exit rather than an abrupt stop in full-time work.
The movement towards phased retirement is showing up in other surveys as well.
Figures from the Employee Benefits Research Institute released in June showed that of the workforce population 55 and up, nearly 30 percent were 65 or older in 2023, compared to just 23 percent in 2000. That same month, the Federal Reserve Bank of New York’s Survey of Consumer Expectations revealed almost a third of people expect to still hold a job beyond age 67.
According to WTW, nearly half of older employees (46 percent) now expect to work past age 70, up from 36 percent two years ago. Moreover, the survey highlights ongoing concerns about retirement readiness, with 79 percent of respondents admitting they aren’t saving enough and only 52 percent feeling on track.
The latest findings from WTW show 34 percent of workers over 50 are interested in phasing into retirement, including 15 percent who are already doing so and another 19 percent intending to follow suit.
Those transitioning often expect to work longer than traditional retirees. For instance, employees who began phasing out of full-time work at age 59 anticipate continuing for another nine years on average.
A drawn-out farewell to the workplace could prove beneficial for both employees and employers, said Jonathan Sterbanz, senior director of retirement at WTW.
“Working fewer hours even with reduced pay can help employees transition into retirement both financially and emotionally,” Sterbanz said in a statement. “At the same time, companies want to hang onto experienced employees and encourage them to pass on their wealth of knowledge to younger employees.”
In this environment, employer-sponsored retirement plans are gaining importance. Within WTW’s survey pool, two in three workers (66 percent) see such plans as crucial, and 72 percent rely on them as their main means to save for retirement.
“Employers are faced with the challenge of how to best meet [workers’] current and long-term financial needs,” said Chris West, WTW’s US LifeSight PEP leader. “As the primary retirement savings vehicles, defined contribution plans can help employers reach that balance.”
West also highlighted how developments in the retirement plan space, such as pooled employer plans and lifetime income solutions, can help employers create more flexibility for their employees as they shift into retirement.
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